PGT Reaches 52-Week High on Recovering Housing Market - Analyst Blog
Zacks By Zacks Equity Research
5 hours ago
On Jun 5, 2015, shares of PGT, Inc. PGTI scaled a new 52-week high of $13.58, before closing a notch lower at $13.53. The new high came on the back of benefits expected from demand in the repair and remodeling market, strategic acquisitions, expansion of its product offerings and productivity improvement.
This Florida-based manufacturer and supplier of residential impact-resistant windows and doors has a market cap of $646 million. PGT has delivered a solid year-to-date return of about 40.5% and an impressive one-year return of over 62%, outperforming the S&P 500.
The average volume of shares traded over the last three months was roughly 277K. The company has outperformed the Zacks Consensus Estimate in two of the four trailing quarters with an average positive surprise of 8.23%.
Growth Drivers
PGT posted adjusted earnings of 14 cents per share in the first quarter of 2015, which doubled from the prior-year quarter’s earnings of 7 cents. Sales also improved around 52% year over year to $95.3 million due to growth in demand and contribution from the CGI acquisition.
For the second quarter of 2015, the company guided sales in the range of $99 million and $102 million based on both organic growth and benefit from the CGI acquisition along with continuous investment in increasing capacity. PGT expects gross margin in the band of 32% and 33% for the second quarter driven by current sales mix and improved operational performance.
Single family housing starts in Florida in the first quarter were approximately 13,300, up 4% from the year-ago quarter. PGT believes that Florida’s economy and population will continue to grow and over time reach the historical average of approximately 110,000 annually.
PGT’s improved operational performance and the new glass plant will aid margin growth. Further, the company is looking forward to the completion of the second phase of the glass plant expansion in the third quarter of 2015.
Notably, PGT’s acquisition of CGI presents an exceptional opportunity for the company. The acquisition will help PGT to diversify and broaden its product portfolio while expanding its manufacturing footprint and providing synergies by maximizing efficiencies and scale.
Moreover, the CGI acquisition and the launch of its new vinyl WinGuard and EnergyVue products in first-quarter 2015 will help PGTI to benefit from the rebounding housing market and recovery in new housing construction in its primary markets of Florida.
PGT currently has a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other stocks in the same industry worth considering are Headwaters Incorporated HW, Quanex Building Products Corporation NX and Aspen Aerogels, Inc. ASPN. While Headwaters and Quanex Building carry a Zacks Rank #1 (Strong Buy), Aspen Aerogels holds the same rank as PGT.
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